KEY POINTS:
A switch in market emphasis from the United States to China should help Prime's East Coast sawmill to avoid the fate of a South Island one that closed last week, the owner said yesterday.
Ernslaw One managing director Thomas Song said the company, which has been in Gisborne for two years, was in for the long haul.
The Bright Wood timber mill in Southland closed, citing the high dollar as one of the factors, and Song said he thought the industry was facing a difficult situation too.
Three factors were contributing to the malaise: rising log prices, a stagnant US market and the high-riding currency.
Song said Ernslaw One had carried out a strategic review of its operations, resulting in a switch of focus to China, whose economy was booming.
It was also telling American customers that unless there was a price rise comparable to the cost increase, the company would have to reduce exposure to that market.
Despite the market situation in the US, the response had been positive. The proportion of products going there had dropped from 60 per cent to about 30 per cent.
Song said the important thing to remember as far as he was concerned was that the company was intendingto be here for long term.
It had bought the East Coast forests, then owned by Huaguang, when they were in a poor situation because "we believe we can eventually make this work".
Having access to its own log resources was also a significant factor.
While rising costs made things difficult for an individual sawmill, it was easier for a group like Ernslaw One, whose size gave it flexibility and the ability to move to another market if necessary.
Song said: "We have been in this country for two years and we hope to be here for another 100. We are still confident that business here will grow."
No jobs were under threat at the Prime mill, which employs about 90 staff, although its operational efficiency was under review.
- NZPA
